Bangladesh Govt to procure 24 LNG cargoes from Gunvor Singapore as demand surges
Each cargo will contain 3.360 billion mmbtu (million British thermal units) LNG and the pricing will be determined based on the JKM (Japan Korea Marker) index. The Cabinet Committee on Economic Affairs on 27 March approved in principle the procurement proposal sent by the Energy Division on 13 March. Zanendra Nath Sarker, chairman of Bangladesh Oil, Gas and Mineral Corporation (Petrobangla), on 28 March told TBS, “This is the first time Bangladesh is importing LNG cargoes under a short-term contract. The company will deliver one cargo monthly, with the flexibility to adjust based on demand. “Most Importantly, the pricing will adhere to the JKM formula, with additional terms favourable to Bangladesh. This arrangement is anticipated to benefit Bangladesh significantly.” Energy Secretary Md Nurul Alam told TBS, “Gunvor Singapore’s proposal was approved by the Cabinet Committee on Economic Affairs at the latest meeting. Now, once the pricing is determined, it will be submitted to the Cabinet Committee on Government Purchases for final endorsement.” When asked about the price proposed by Gunvor, the energy secretary said, “Bangladesh has six long-term contracts with different companies for LNG purchase. We have a clear understanding of the market price. Besides, Gunvor Singapore will adhere to a formula [JKM], making the evaluation process straightforward.” Earlier on 10 January, the Singapore-based company proposed to the Energy Division to deliver 12 cargoes this year, and 12 cargoes in 2025. On 4 March, Prime Minister Sheikh Hasina, who is also the minister of Power, Energy, and Mineral Resources, approved the procurement proposal process. Currently, the government purchases spot LNG from 23 global companies, including Gunvor Singapore Ltd, through tendering and through long-term contracts from Qatar and Oman. On 23 January, the cabinet committee on government purchases authorised the procurement of an LNG cargo from Switzerland’s Total Energies Gas & Power Ltd at a rate of $10.88 per mmbtu. Another spot cargo from Gunvor Singapore Ltd is expected to arrive in April for which the government is paying $9.37 per mmbtu. Other than spot LNG, the Energy Division also procures LNG from Oman and Qatar via long-term contracts, which are processed and supplied to the national grid by the two LNG terminals set up at Maheshkhali in Cox’s Bazar. However, buying 24 cargoes from Gunvor Singapore marks the country’s first LNG procurement under a two-year contract. The Energy Division now seeks to procure LNG through short-term contracts rather than long-term ones, attributing this decision to the fluctuating nature of LNG prices in the international market, which complicates sourcing. A review of Petrobangla’s LNG procurement records from the spot market in recent years revealed fluctuating prices. In 2022, spot LNG was procured at rates ranging from $38.93 to $24.25 per mmbtu. In 2023, Petrobangla purchased LNG at prices ranging from $19.74 to $10.97 per mmbtu. As of January 2024, the highest recorded price for purchased LNG stood at $15.96 and the lowest price was recorded at $9.77 per mmbtu.
India accounts for 20% of upcoming regasification capacity in Asia Pacific
India, the world’s fourth largest liquefied natural gas (LNG) importer, is expanding its natural gas infrastructure by adding 24 million tonnes per annum (mtpa) of capacity accounting for around 20 per cent of the total regasification capacity being added in Asia Pacific. As per the latest annual report of the Gas Exporting Countries Forum (GCEF), India will be the world’s largest growth market for natural gas in the next decade with China claiming the top spot till 2030. The GECF report pointed out that Asia-Pacific boasted of around 566 MTPA of regasification capacity in 2022, with a significant 82 per cent primarily situated within the legacy JKT (Japan, South Korea, Chinese Taipei) group, constituting 64 per cent and China with 18 per cent. The rest, comprising South and Southeast Asia, contributed to the remaining 18 per cent. Among these, Japan leads with 210 mtpa , followed by South Korea (139 mtpa ), China (100 mtpa) and India (40 mtpa). “In 2022, construction was underway for approximately 121 mtpa of regasification capacity in Asia Pacific, with China (74 mtpa ) and India (24 mtpa ) taking the lead. China represents around 60 per cent of the capacity under construction, while India is responsible for roughly 20 per cent of the ongoing development of regasification infrastructure,” it added. Asia Pacific is projected to remain the dominant long-term LNG import market. “China is poised to be the largest growth market this decade, but India is expected to assume that role after 2030. South and Southeast Asia are forecast to be the markets with the highest incremental LNG import growth, albeit from a lower base,” the report anticipates. Expanded capacity India’s gas demand is forecast to be met via expanded gas pipeline and LNG regasification capacity. Estimations indicate that Indian LNG imports could double, reaching 39 mt by 2030, and rise to 80 mt by 2040 and 105 mt by 2050. “Realising such an outcome necessitates substantial investment in both supply and distribution infrastructure. By 2050, it is anticipated that India will increase its regasification capacity by 75 mtpa, reaching a total of 115 mtpa , which marks a significant rise from the existing capacity of 40 mtpa,” GECF said. India is actively targeting a 15 per cent increase in the share of natural gas in its energy mix by 2030. This goal is to be achieved through the expansion of pipeline networks, construction of LNG terminals, and support for domestic production. However, the GECF report said that despite a robust government ambition for natural gas to reach 15 per cent, the target is “unlikely to be met”. Gas production Natural gas production in India has been on an upward trajectory since 2020, surging from 24 billion cubic meters (bcm) to 35 bcm in 2023. A significant portion of this increase is attributed to offshore production, accounting for over 70 per cent of the overall production growth. Introduced in 2016, the Hydrocarbon Exploration and Licensing Policy (HELP) sought to enhance India’s upstream sector regulations, attract foreign investment and expedite exploration activities. This initiative introduced revenue-sharing contracts (RSC) as a replacement for conventional Production Sharing Contracts (PSCs). The shift aimed to streamline operations, address challenges such as cost recovery and stimulate increased exploration opportunities, ultimately enhancing the country’s upstream activities. These reforms have fostered greater international participation in India’s upstream sector. For instance, Reliance Industries (RIL) and BP, have brought three offshore fields into production since 2020. The R-series commenced production in 2020 followed by the Satellite Cluster in 2021 and most recently, the MJ field. BP estimates that, at their peak, these fields are to collectively produce 10 bcm to meet domestic demand in India, GECF noted. Oil and Natural Gas Corporation (ONGC) is planning to boost its natural gas production by 25 per cent by 2025 from 2022 level through intensified exploration. In recent developments, ONGC announced the discovery of a gas field in the Mumbai basin and an onshore discovery in the Krishna Godavari basin, it added. “We anticipate that India is expected to achieve a natural gas production level of 50 bcm by 2050, with 95 per cent of this production originating from offshore projects,” the report anticipates.
Govt reduces gas price for Reliance to $9.87; rate for CNG, PNG unchanged
The government on Sunday cut the price of natural gas produced from difficult areas like deep sea KG-D6 block of Reliance Industries, marginally to $9.87 per million British thermal unit in line with softening of benchmark international gas prices, an official notification said. However, the price of gas that is used for making CNG for fuelling automobiles or piping to household kitchens for cooking purposes will remain unchanged due to a price cap that is set at 30 per cent less than market rates such as that paid to Reliance. For the six-month period starting April 1, the price of gas from deepsea and high-pressure, high-temperature (HPTP) areas has been cut to $9.87 per mmBtu from $9.96, oil ministry’s Petroleum Planning and Analysis Cell (PPAC) said in a notification. This is the third straight bi-annual reduction in rates for difficult fields. Price was for six months beginning October 1, 2023 slashed 18 per cent to $9.96 per mmBtu from $12.12 for the April to September 2023 period. Prior to that, the rate was a record $12.46 for October 2022 to March 2023. The government bi-annually fixes prices of the locally-produced natural gas — which is converted into CNG for use in automobiles, piped to household kitchens for cooking and used to generate electricity and make fertilisers. Two different formulas govern rates paid for gas produced from legacy or old fields of national oil companies like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), and for newer fields lying in difficult-to-tap areas, such as deepsea. Rates are fixed on April 1 and October 1 each year. In April last year, the formula governing legacy fields was changed and indexed to 10 per cent of the prevailing Brent crude oil price. The rate was, however, capped at $6.5 per mmBtu. Rates for legacy fields are now decided on a monthly basis. For April, the price came to $8.38 per mmBtu but because of the cap, the producers would get only $6.5 per mmBtu, the PPAC said. The price for difficult area gas continues to be governed by the old formula that takes a one-year average of international LNG prices and rates at some global gas hubs with a lag of one quarter. International prices had fallen in 2023 and so it will translate into lower prices for difficult fields starting October. India is aiming to become a gas-based economy with the share of natural gas in its primary energy mix targeted to rise to 15 per cent by 2030 from the existing level of around 6.3 per cent.
Over 20% of the World’s Oil Refining Capacity Is at Risk of Closure
More than 20% of the total global refining capacity is at some risk of closure as refining margins are set to weaken alongside demand, while carbon taxes could also burden many refiners, Wood Mackenzie has said in a recent report. Overall, based on expected net cash margins in 2030, Wood Mackenzie has identified 121 out of 465 screened refining sites “at some risk of closure”. This represents a cumulative 20.2 million bpd of refining capacity, or 21.6% of the global capacity last year, WoodMac’s analysis showed. The energy consultancy sees refiners in Europe and China at higher risk of shutting down because of worsened economics. European refineries will see their net cash margins decline from 2030 due to the unwinding of free allowances for carbon emissions, while transport fuel demand in developed countries is expected to begin to decline from next year onwards, according to WoodMac’s analysis. “China will see liquid demand peak by 2027 and start to fall as the country actively electrifies their road transport. Non-OECD countries will enjoy continued demand growth beyond 2030, but their refiners will not be immune as global demand for transport fuels falls,” researchers and analysts and Wood Mackenzie wrote. Europe could also see its long-standing fuel export trade volumes with Nigeria tumble after the start-up of the Dangote Refinery, Africa’s biggest, earlier this year. The trade, estimated to be worth $17 billion each year, could be threatened by soaring output at the Dangote refinery, traders and analysts told Reuters earlier this month. The Dangote refinery, with a processing capacity of 650,000 barrels per day (bpd), is expected to meet 100% of Nigeria’s demand for all refined petroleum products, and will also have a surplus of each of the products for export. Meanwhile, oil majors have recently announced upcoming closures of European oil refineries that would be converted into biofuels-making facilities. The latest include Eni’s refinery in Livorno, Italy, and Shell’s oil refinery at the Wesseling site in Germany which will be converted into a production unit for base oils.
Adani Power enters into 20-year PPA with Reliance Industries
Adani Power’s wholly-owned subsidiary Mahan Energen Limited (MEL), which recently bagged a big coal block in Chhattisgarh for commercial coal mining, has entered into a 20-year, long-term Power Purchase Agreement (PPA) with Reliance Industries Limited (RIL). The agreement is for the supply of 500 MW of electricity under the captive user policy as defined in the Electricity Rules, 2005, the company said in a regulatory filing on Thursday. One unit of 600 MW capacity of MEL’s thermal power plant, out of its aggregate operating and upcoming capacity of 2,800 MW, will be designated as the captive unit for this purpose, it stated.
Numaligarh Refinery partnered with Assam Gas Company Limited
Yet another Landmark Moment. Numaligarh Refinery Limited has partnered with Assam Gas Company Limited by Signing of Sales Purchase Agreement on 27th of March 2024 at Corporate office of NRL in presence of Shri Bhaskar Jyoti Phukan, Managing Director, NRL, Shri Nikunja Borthakur, Sr. CGM (Corp. Affairs), MD, AGCL, Shri Gokul Chandra Swargiary along with other officials from both the organisation. Assam Gas Company Limited has ventured into the retail domain of MS & HSD. AGCL will be commissioning their retail outlets in Assam and other NE States from this Financial Year and NRL will be supplying MS and HSD to all their proposed retail outlets.
Transporting crude oil from Russia to India offers huge margins
Discounted seaborne crude oil flowing from Russia to India, which accounts for more than one-third of New Delhi’s overall imports, has opened up avenues to make huge margins — sometimes to the tune of $23 a barrel — from transporting the critical commodity. he findings form part of a report by the Oxford Institute for Energy Studies (OIES), released on Monday, on the outlook for Russia’s oil and gas production and exports, which said “the biggest beneficiary of this new trade at discounted prices has been India”. The report pointed out that there is an “obvious logic” on increased Indian purchases of Russian oil due to the large discount on Urals Blend to Brent, but it needs to be remembered that this is based on the FOB price in the Baltic Sea. “The discount has not only offered cheap oil to India but has also opened a huge margin to be made in the provision of transport and ancillary services to deliver the oil from northern Europe to Southern Asia,” the OIES study said. Analysing the delivered price of Russian oil to the west coast of India with the FOB price at Primorsk during 2023, the study said that although the differential narrowed significantly over the last eight months (till August 2023) the margin has ranged from a high of around $23 per barrel to the current $8 per barrel. “This has tempted traders and tanker owners to get involved with the trade in Russian crude not only to India but also to other Asian destinations where similar margins have been on offer and has helped to facilitate the liquidity of the global oil market. This has underpinned the decline in the oil price from its high of over $122 per barrel in May 2022 to the current level of around $84 per barrel (October 5, 2023),” it added.
Indian refiners buy more US crude amid tighter sanctions on Russian oil
More than 250,000 barrels per day of U.S. crude is set to arrive in India next month, the highest in more than a year, ship tracking data showed, amid tighter enforcement of sanctions on Russian crude. India, the world’s third-biggest oil importer and consumer, is looking to diversify its oil supplies as fresh U.S. sanctions on Moscow threaten to dent Russian oil sales to India, the biggest buyer of Russian seaborne crude. About 7.6 million barrels of oil, or 256,000 barrels per day (bpd), were headed to India on three very large crude carriers and three Suezmax vessels, according to ship tracking firm Kpler. The ships, which were largely headed to India’s west coast, were chartered by Reliance Industries, Vitol, Equinor and Sinokor, among others, according to data from financial firm LSEG. India was the top buyer of Russian oil last year after other groups retreated from purchases following Western sanctions on Moscow for its invasion on Ukraine in February 2022. Last month, the U.S. tightened efforts to reduce Russia’s oil trade adding sanctions on state-owned shipping firm Sovcomflot and 14 crude oil tankers involved in Russian oil transportation. India’s Reliance, operator of the world’s biggest refining complex, will not buy Russian oil loaded on tankers operated by Sovcomflot after recent U.S. sanctions, sources told Reuters last week. More Indian refiners plan to shun Sovcomflot vessels, which may weigh on imports of Russian oil and leave Russia with fewer outlets for its flagship product, sources saIf.
LNG importers rush to buy spot cargoes as price hits 3-year low
Power companies and refineries are doubling down on spot liquefied natural gas (LNG) as prices have hit a three-year low, according to industry officials aware of the development. LNG importers Gail, Gujarat State Petroleum Corporation (GSPC), Torrent Gas, Bharat Petroleum Corp (BPCL) and Indian Oil Corp (IOC), among others, are buying spot cargoes as the Asia spot LNG price has declined between $8.3 and $9 per million British thermal units (mmBtu) due to weak demand and high inventory in both Asia and Europe, giving these companies room to expand sourcing and sales to the power, fertiliser, refining and other sectors. During the same period last year, spot LNG prices averaged $18.75 per mmBtu. In 2022, spot LNG prices touched a record $70 per mmBtu on the back of the Russia-Ukraine war. LNG is mostly traded through long-term contracts of 20-25 years and in the spot market. The price of spot LNG is higher than long-term LNG. “This price drop in LNG is aiding power units, refineries, petrochemical and fertiliser plants,” said one of the persons cited above. “Reliance Industries and HPCL (Hindustan Petroleum Corp) have sought cargoes from GSPC, and Indian Oil is also procuring LNG cargoes for its refineries.” As demand for power rises amid higher temperature, power companies including Torrent Power and NTPC are also buying more LNG. India has 25,000 MW of installed gas-based power capacity. While NTPC owns 5,000 MW, the rest is with private as well as state government entities. “The government wants power generation companies to buy gas and commission their stranded power units. We are anticipating record power demand this summer,” he said. The Central Electricity Authority (CEA) has said power demand may see a spike between March and June.
LNG imports increase 37.5% in February 2024
INDIA’s imports of liquefied natural gas (LNG) are up 37.5% in February 2023 over the corresponding period of the previous year, according to a monthly report by the Petroleum Planning Analysis and Cell (PPAC). The total LNG import in February 2024 was 2,522 million standard cubic meters (MMSCM) against last February’s 1,834 MMSCM. According to an S& P report, India is anticipating an upswing in LNG imports in 2024, with projections suggesting a substantial 7-8% year-on-year increase. “Total imports of LNG (provisional) during the month of February 2024 was 2,522 MMSCM (an increase of 37.5 % over the corresponding month of the previous year),” reads the report. India is trying to increase its LNG import capacity to lift the share of natural gas in its energy mix to 15% by 2030 from the current level of 7%. The move is to lower the dependence on dirtier fossil fuels such as coal and oil. India’s gas production in February was up 11.1% from the same month in 2023, at 2,947 MMSCM. The total consumption in February this year was 5,650 MMSCM (provisional). Major consuming sectors were Fertilizer (28%), City Gas Distribution (20%), Power (12%), Refinery (10%) and Petrochemicals (4%). The total natural gas available for sale during February 2024 was 4935 MMSCM (an increase of 22.5% over the corresponding month of the previous year). Meanwhile, India is also trying to cut down its import and increase production. According to a report by CareEdge Ratings, India’s reliance on imported liquefied natural gas (LNG) is projected to decrease to around 45% by FY26, down from 53% in FY21. This change is attributed to an increase in domestic natural gas production, with nearly 30 MMSCM per day of new production added over the past three years.